This paper studies whether fiscal corrections cause large output losses. We find that it matters crucially how the fiscal correction occurs. Adjustments based upon spending cuts are much less costly in terms of output losses than tax-based ones. Spending-based adjustments have been associated with mild and short-lived recessions, in many cases with no recession at all. Tax-based adjustments have been associated with prolonged and deep recessions.
24 Ağustos 2012 Cuma
What is the best way to reduce the government's budget deficit?
New research by Alberto Alesina, Carlo Favero, and Francesco Giavazzi suggests an answer:
I am number 88
...on the Amazon list of bestselling books. I believe it is the first time one of my texts has made it into the top 100.
20 Ağustos 2012 Pazartesi
17 Ağustos 2012 Cuma
The Economist Platform
NPR has a list of policies that economists across the political spectrum love. It has some overlap with my list from few years back.
14 Ağustos 2012 Salı
How to encourage research into neglected diseases
There a few things that infuriate me about the pharmaceutical industry: the obscene returns on investment it gets, how it games the patent system, and how it neglects some important infectious diseases. But the pharmaceutical companies just respond to a poor institutional setup, where patents are too generously given and governments favor them too much compared to consumers (and the government itself, as in the USA). As for neglected diseases there is simply no money to be made as these are limited to poor developing countries.
Frank Müller-Langer studies how the discovery and provision of drug preventing and treating currently neglected infectious diseases could be improved. He distinguishes push and pull subsidies. Push programs are those that subsidizes the inputs, such as lab equipment or manpower. Pull programs subsidize results. The question is what to use. Basic research should quite obviously be helped with push programs. This is typically done in an academic environment where rewards come from publication, all you need is the means to conduct research, the will is there. The next phase, development and implementation, should more be helped with pull programs. Incentivizing results is more important there and could lead to surprises. I am thinking here, in a very different context, about the Ansari X Prize that rewarded with $10 million the first non-governmental organization to successfully launch a space shuttle. The prize seemed low compared to the costs, yet 26 organizations participated. Something similar should work for malaria, yellow fever, etc.
Frank Müller-Langer studies how the discovery and provision of drug preventing and treating currently neglected infectious diseases could be improved. He distinguishes push and pull subsidies. Push programs are those that subsidizes the inputs, such as lab equipment or manpower. Pull programs subsidize results. The question is what to use. Basic research should quite obviously be helped with push programs. This is typically done in an academic environment where rewards come from publication, all you need is the means to conduct research, the will is there. The next phase, development and implementation, should more be helped with pull programs. Incentivizing results is more important there and could lead to surprises. I am thinking here, in a very different context, about the Ansari X Prize that rewarded with $10 million the first non-governmental organization to successfully launch a space shuttle. The prize seemed low compared to the costs, yet 26 organizations participated. Something similar should work for malaria, yellow fever, etc.
13 Ağustos 2012 Pazartesi
Romney Economics
Here are several things to read on the topic:
- A white paper from economists advising Mitt Romney.
- An attack from Paul Krugman (natch).
- A response from John Taylor.
The impact of the minimum wage in a developing economy
Whether raising the minimum wage decreases employment has always been controversial, foremost because some studies could not find such an effect, second because there are some theoretical grounds that can support the opposite effect. Some of this has been discussed on this blog: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11. Only one of those works pertained to a developing country, where it is found, using household level data, that an increase in the minimum wage leads to a shift from the formal to the informal sector and leads to a decrease in poverty.
Ximena Del Carpio, Ha Nguyen and Liang Choon Wang provide new evidence, this time from Indonesia and using data from manufacturing firms. The impact of an increase of the minimum wage depends highly on what you are looking at: it increases employment at the provincial level, but decreases it at the firm level. The negative effect is particularly strong for non-production workers, workers with few skills, female workers, and small firms. It should not be a surprise that people with lower skills are more affected, and small firms, too, as they tend to have lower wages. But this just confirms that empirical works on the minimum wage are hard and confusing.
Ximena Del Carpio, Ha Nguyen and Liang Choon Wang provide new evidence, this time from Indonesia and using data from manufacturing firms. The impact of an increase of the minimum wage depends highly on what you are looking at: it increases employment at the provincial level, but decreases it at the firm level. The negative effect is particularly strong for non-production workers, workers with few skills, female workers, and small firms. It should not be a surprise that people with lower skills are more affected, and small firms, too, as they tend to have lower wages. But this just confirms that empirical works on the minimum wage are hard and confusing.
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24 Ağustos 2012 Cuma
What is the best way to reduce the government's budget deficit?
New research by Alberto Alesina, Carlo Favero, and Francesco Giavazzi suggests an answer:
This paper studies whether fiscal corrections cause large output losses. We find that it matters crucially how the fiscal correction occurs. Adjustments based upon spending cuts are much less costly in terms of output losses than tax-based ones. Spending-based adjustments have been associated with mild and short-lived recessions, in many cases with no recession at all. Tax-based adjustments have been associated with prolonged and deep recessions.
I am number 88
...on the Amazon list of bestselling books. I believe it is the first time one of my texts has made it into the top 100.
20 Ağustos 2012 Pazartesi
17 Ağustos 2012 Cuma
The Economist Platform
NPR has a list of policies that economists across the political spectrum love. It has some overlap with my list from few years back.
14 Ağustos 2012 Salı
How to encourage research into neglected diseases
There a few things that infuriate me about the pharmaceutical industry: the obscene returns on investment it gets, how it games the patent system, and how it neglects some important infectious diseases. But the pharmaceutical companies just respond to a poor institutional setup, where patents are too generously given and governments favor them too much compared to consumers (and the government itself, as in the USA). As for neglected diseases there is simply no money to be made as these are limited to poor developing countries.
Frank Müller-Langer studies how the discovery and provision of drug preventing and treating currently neglected infectious diseases could be improved. He distinguishes push and pull subsidies. Push programs are those that subsidizes the inputs, such as lab equipment or manpower. Pull programs subsidize results. The question is what to use. Basic research should quite obviously be helped with push programs. This is typically done in an academic environment where rewards come from publication, all you need is the means to conduct research, the will is there. The next phase, development and implementation, should more be helped with pull programs. Incentivizing results is more important there and could lead to surprises. I am thinking here, in a very different context, about the Ansari X Prize that rewarded with $10 million the first non-governmental organization to successfully launch a space shuttle. The prize seemed low compared to the costs, yet 26 organizations participated. Something similar should work for malaria, yellow fever, etc.
Frank Müller-Langer studies how the discovery and provision of drug preventing and treating currently neglected infectious diseases could be improved. He distinguishes push and pull subsidies. Push programs are those that subsidizes the inputs, such as lab equipment or manpower. Pull programs subsidize results. The question is what to use. Basic research should quite obviously be helped with push programs. This is typically done in an academic environment where rewards come from publication, all you need is the means to conduct research, the will is there. The next phase, development and implementation, should more be helped with pull programs. Incentivizing results is more important there and could lead to surprises. I am thinking here, in a very different context, about the Ansari X Prize that rewarded with $10 million the first non-governmental organization to successfully launch a space shuttle. The prize seemed low compared to the costs, yet 26 organizations participated. Something similar should work for malaria, yellow fever, etc.
13 Ağustos 2012 Pazartesi
Romney Economics
Here are several things to read on the topic:
- A white paper from economists advising Mitt Romney.
- An attack from Paul Krugman (natch).
- A response from John Taylor.
The impact of the minimum wage in a developing economy
Whether raising the minimum wage decreases employment has always been controversial, foremost because some studies could not find such an effect, second because there are some theoretical grounds that can support the opposite effect. Some of this has been discussed on this blog: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11. Only one of those works pertained to a developing country, where it is found, using household level data, that an increase in the minimum wage leads to a shift from the formal to the informal sector and leads to a decrease in poverty.
Ximena Del Carpio, Ha Nguyen and Liang Choon Wang provide new evidence, this time from Indonesia and using data from manufacturing firms. The impact of an increase of the minimum wage depends highly on what you are looking at: it increases employment at the provincial level, but decreases it at the firm level. The negative effect is particularly strong for non-production workers, workers with few skills, female workers, and small firms. It should not be a surprise that people with lower skills are more affected, and small firms, too, as they tend to have lower wages. But this just confirms that empirical works on the minimum wage are hard and confusing.
Ximena Del Carpio, Ha Nguyen and Liang Choon Wang provide new evidence, this time from Indonesia and using data from manufacturing firms. The impact of an increase of the minimum wage depends highly on what you are looking at: it increases employment at the provincial level, but decreases it at the firm level. The negative effect is particularly strong for non-production workers, workers with few skills, female workers, and small firms. It should not be a surprise that people with lower skills are more affected, and small firms, too, as they tend to have lower wages. But this just confirms that empirical works on the minimum wage are hard and confusing.
Kaydol:
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